The Research On Leading Into Market Maker System In China's Stock Market

Market Maker System(MMS) has a history of more than 30 years in developed stock market, both history and reality has shown that Market Maker system is an integral part of a complete stock exchange system, its function has brought a common level of understanding in stock exchange, is a product of a particular historical phase in the development of stock market, and also effective means on increasing market liquidity, keeping market stability, standardizing market order. Up to now, Market Maker System dose not get any chance to develop in domestic stock market at all. Study Market Maker System, benefit foreign successful experience shall provide new train of thought on transaction system developmentThis paper starts from the history origin and action characteristic of MMS, detail analysis on possibility, applicability and how to introduce MMS is done based on foreign successful experience, as well as the concrete situation and practice in our country. The paper falls into three parts:1. Outline of Market Maker SystemThis section firstly starts from the history origin of Market Maker System, give an acute analysis on the fundamental concept and act. Considering foreign developed capital market's successful practical experience, a clear exposition of the essential difference between Market Maker System and action of dealer in domestic stock market is presented.2. Applicability analysis on introducing Market Maker System to domestic stock marketThis section generally reviewed the discussion on introducing MMS to stock market in the history of our country and currently different market entities'foothold,point of departure on the question of introducing MMS. Secondly, based on China's realities, considering the liquidity and stability of China's stock market, the applicability and possibility on introducing MMS is analyzed. Additionally, new transaction regulations are introduced and the condition of stock market in current stage of development further proved that the soil favorable to MMS growth is in formation process.3. How to introduce market maker system in china's stock marketMarket maker system is totally a new thing for us, we should need some time and necessary conditions to establish this system. In this process, it's rational for us to carry on the innovation step by step on the basis of our reality and also use the successful experience in the international markets for reference when it's necessary. First this part demonstrate that the combination of order-driven system and quote-driven system can make complementary to each other, and then point out the tendency of blending transaction system in our stock market in the future.There are several innovative points for this paper summarized as follows:First of all, it points out that the cost of liquidity has become crucial factor nowadays because of the development of technology ,and two key elements should be considered in the measure of liquidity ;Secondly, by the comparison between blending model and balanced model, it demonstrates that the blending model is more applicable to our stock market because it can play a bigger role in developing the liquidity and stability of the market for its larger function range;Third, it also gives some suggestions about the supporting policies and measures for introducing market maker system such as the Short-Mechanism, financing security trade and other privileges to the market makers and so on.